Megan Ellison's Harsh New Reality: Fewer Films, "More Responsible" Finances

Annapurna_lemonade_stand_Illo_Black BG - THR - H 2018
Illustration by: Laemeur

An indie benefactor hits pause on new movies as a top executive departs and James Bond hangs in limbo.

Megan Ellison has a well-established reputation for impulsive decision-making and highly erratic communication skills. So perhaps it’s not entirely surprising that when her Annapurna Pictures abruptly dropped its star-studded Gretchen Carlson-Roger Ailes movie on Oct. 9 — a few short weeks before it was to go into production — the company didn’t actually inform its own executives.

The job fell to key talent on the project, who had learned the news from their representatives. That seems like bad form, especially for a film starring Charlize Theron, Nicole Kidman, Margot Robbie, Kate McKinnon, John Lithgow and more. But Annapurna is going through troubled times.

Though some insiders say they remain upbeat about Annapurna’s prospects, the company’s operations now are being reviewed by an executive (with experience in business, but not in Hollywood) dispatched by Ellison’s father, Oracle founder Larry Ellison. Megan, 32, “wasn’t running a financially responsible organization,” says a person with knowledge of the situation. “Larry respects money and wants it to be run in a more responsible way.” The company is not going to greenlight any movies for more than a year, this person adds. An Annapurna insider disputes that but says Megan has recognized the need to make changes in the film operation and wanted her father’s input.

Clearly Annapurna could emerge a much scaled-back entity. The question then becomes whether the company will generate enough films to sustain its distribution operation.

At issue are not just Annapurna’s movies but those of MGM, which are to be released through a joint venture. Creed II, the first big MGM movie under the deal and Annapurna’s most commercial release to date, will open Nov. 21. Several other MGM movies are scheduled for the months ahead, but the jewel in the crown is the next James Bond, set for February 2020. If Annapurna falters, that film is likely to be released by Universal, which is handling overseas distribution. (MGM might also make a play to distribute domestically itself.)

In a statement provided to The Hollywood Reporter, a company spokesperson says: "Annapurna remains committed to the artists we work with and the films we produce together. We are devoted to our current projects, partners and upcoming slate across all divisions. Since the company’s inception, Annapurna has been known to take risks and swing big. We’re proud of that. We are simply recalibrating so that our creative decisions are fully aligned with our business goals."

Ellison’s attempt to launch a distribution company last year with the sort of prestige fare she favors was met with great skepticism by Hollywood insiders. As one senior industry figure told THR, when Annapurna’s distribution company was about to launch with the costly and money-losing Kathryn Bigelow film Detroit, "It's a tough market. Why would you set up a distribution company in that sector and have to make a whole bunch of movies to cover overhead? It's not impossible to win, it's just harder than ever. You've got to be better, smarter or luckier than anyone else. I would tell anybody not to do it." Indeed, a recent casualty is Open Road Films, which foundered despite winning the best picture Oscar for Spotlight, and STX Entertainment is facing strong headwinds. 

Annapurna was stocked with industry veterans who were believed to have commanded top dollar salaries, including Marc Weinstock, formerly president of domestic marketing at Fox, and Erik Lomis, who had been distribution president at The Weinstein Co. Weinstock left as president of the company after two years. “Marc was the big loss,” says a source who has worked on multiple films with Annapurna. “That was a serious trouble sign.”

It hasn’t been just the stress of launching a distribution operation that has hampered Annapurna; it’s the cost of the movies. Just as Detroit was considered way overpriced at more than $40 million, industry insiders are agog at Ellison’s decision to make Vice, chronicling the rise of Dick Cheney, at a budget said to be in excess of $60 million. The situation is representative of Annapurna’s problems: Much as the industry admires director Adam McKay and stars Christian Bale and Amy Adams, that number makes no sense to many observers for a film that hardly seems like a commercial bet. (McKay’s previous film, The Big Short, grossed $133 million worldwide and was nominated for the best picture Oscar.)

The press-shy Ellison is also haunted by repeated complaints that she often doesn’t return phone calls or respond to emails. “She’s really nice when you first meet her and then — poof,” says a filmmaker who’s had difficulty at the company, adding that Annapurna execs “get frozen trying to make decisions and she’s not accessible.” One talent rep with important auteur clients says for that reason, he avoids doing business with Annapurna.

Even a high-level insider concedes that the handling of the Ailes movie was problematic. Annapurna developed the project, initially at a cost of $45 million. (The film was to shoot in Los Angeles to accommodate Theron.) Annapurna began to try to reduce the budget and to cut the number of shoot days from 50 to 37 — a curtailed schedule that, according to a source, was deeply upsetting to Theron. Some in the independent film world suspected that Larry Ellison had political objections to the film, but a source familiar with his thinking insists that the only consideration was financial.

Under pressure, Theron and her agents at WME brought in Bron Studios/Creative Wealth Media to finance a third of the movie. At one point, says a source, the shooting days had been cut so severely that Bron objected. Finally, the parties seemed to agree on a budget slightly under $35 million. But a few days later the plug was pulled, blindsiding Annapurna execs who were at Huntington Gardens in San Marino on a tech scout. 

Bron execs, also taken unaware, quickly upped their stake to 50 percent in order to keep the project from falling apart while a co-financier was found. Lionsgate now is in negotiations to fill that void as co-financier and distributor of the movie.

Shortly after the Ailes movie was dropped, Annapurna president of film Chelsea Barnard was out. The producers of the Ailes film still are planning to start filming as scheduled this month.

Annapurna has a number of films on the runway, including Moonlight director Barry Jenkins’ awards hopeful, If Beale Street Could Talk (Nov. 30), and the dark Nicole Kidman thriller Destroyer and Vice (both Dec. 25). But it seems a very real possibility that Annapurna’s big-swing days may be over. “It’s not that she has bad taste,” says a source with knowledge of the situation. “She was just making movies that appeal to her. But you can only do that for so long with someone else’s money.” In hopes that Richard Linklater's upcoming Where'd You Go, Bernadette, based on the novel, will be a commercial hit, Annapurna has put the film through several rounds of test screenings and asked for changes based on the audience response.

Still, the Annapurna spokesperson maintains the company will remain a force in the business: “Rest assured, we are committed as ever to our mission and purpose. We are not going anywhere.”

Tatiana Siegel contributed to this report.

A version of this story first appears in the Oct. 17 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.